Correlation Between Aquagold International and Chunghwa Telecom

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Chunghwa Telecom at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aquagold International and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Chunghwa Telecom Co, you can compare the effects of market volatilities on Aquagold International and Chunghwa Telecom and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aquagold International with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Chunghwa Telecom.

Diversification Opportunities for Aquagold International and Chunghwa Telecom

0.48

Correlation Coefficient

Aquagold International  Chunghwa Telecom

Very weak diversification

The 3 months correlation between Aquagold and Chunghwa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Aquagold International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aquagold International are associated (or correlated) with Chunghwa Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Telecom has no effect on the direction of Aquagold International i.e., Aquagold International and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Aquagold International and Chunghwa Telecom

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Chunghwa Telecom. In addition to that, Aquagold International is 14.53 times more volatile than Chunghwa Telecom Co. It trades about -0.13 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about -0.06 per unit of volatility. If you would invest  3,795  in Chunghwa Telecom Co on October 14, 2024 and sell it today you would lose (117.00) from holding Chunghwa Telecom Co or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Aquagold International  vs.  Chunghwa Telecom Co

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Chunghwa Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chunghwa Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Chunghwa Telecom is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aquagold International and Chunghwa Telecom

The main advantage of trading using opposite Aquagold International and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Chunghwa Telecom can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chunghwa Telecom will offset losses from the drop in Chunghwa Telecom's long position.

The idea behind Aquagold International and Chunghwa Telecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..